Public versus private debt. Where Brown DID go wrong

Generali

I don't think this argument is true. I'm not aware of the French or German Governments acting to force debt levels down.

Lower Government spending would act to reduce Government debt as well as higher taxes.

JayScottGreenspan

I think more progressive taxation is pretty irrelevant.

I'd be in favour of a more progressive tax regime in the UK, but it wouldn't raise much extra. The PAYE top rate raises naff all compared to the basic band.

Sir_Humphrey

Generali wrote: »

I don't think this argument is true. I'm not aware of the French or German Governments acting to force debt levels down.

Lower Government spending would act to reduce Government debt as well as higher taxes.

Re paragraph one. I know quite a few French people socially, and credit card spending is very unusual in France. In France and Germany, most people rent which also reduces debt level. In the latter case, (renting) the government rules on tenancy rights provided the carrot).

The second point is largely one of political choice. Personally, I prefer good public health and education to conspicuous consumption.

Generali

Sir_Humphrey wrote: »

Re paragraph one. I know quite a few French people socially, and credit card spending is very unusual in France. In France and Germany, most people rent which also reduces debt level. In the latter case, the government rules on tenancy rights provided the carrot.

The second point is largely one of political choice. Personally, I prefer good public health and education to conspicuous consumption.

That's not really anything to do with the Government - in France home ownership rates are higher than the UK.

French banks are much more conservative in their lending policies. I don't think that has anything to do with the Government however.

2nd para is true in part. The choice isn't just between conspicuous consumption and public health and education though. That's a huge oversimplification.

nickmason

Sir_Humphrey wrote: »

The second point is largely one of political choice. Personally, I prefer good public health and education to conspicuous consumption.

Again, I think you've set up a false dichotomy.
Yes, there's lots of conspicuous consumption, and it's trendy and easy to castigate the buyers of flat screens etc. Those that have spent credit on them and then find themselves in trouble are easy targets.

But looking at actual individual spending, these are a drop in the ocean. Probably 1-2%, although adding holidays might push that figure up a bit. (And even then, a proportion of that spend is going to the UK importer/sales agent).

The vast majority of spend does go back into the economy; travel, food, services, bills. High housing costs are a problem (but then that's been done to death on this board).

Obviously you can't easily decide to top-slice the 1-2% away from conspicuous consumption and put it into education.

(Once again Generali says it more pithily while I'm crafting the "essay"!)

Sir_Humphrey

Generali wrote: »

That's not really anything to do with the Government - in France home ownership rates are higher than the UK.

I don't think that is right - you aren't thinking of Spain perhaps? Even if I am mistaken, my point about Germany stands.

Generali wrote: »

French banks are much more conservative in their lending policies. I don't think that has anything to do with the Government however.

I do not know the ins and outs of French bank regulation. It is fair to say that the French tend to be frugal lot in any case, which explains why the French government had to intervene to get them to buy new cars in the mid-1990s.

Generali wrote: »

2nd para is true in part. The choice isn't just between conspicuous consumption and public health and education though. That's a huge oversimplification.

Obviously, the size of the proverbial cake matters too. Looking at the rank of countries by per Capita GDP, there is a variety of ways of achieving this. It can be by the Scandinavian means, or the Anglo Saxon means.

EDIT: To Nick, I would hardly say buying a telly is conspicuous consumption given that almost ALL new tellies are flatscreens. Buying a 70 inch screen for a few grand is, buying a 32 inch screen for £500 is not.

I know exaggeration of the other argument is fair game in debating societies, but desist or I will turn this into definition debate!

Generali

Sir_Humphrey wrote: »

I don't think that is right - you aren't thinking of Spain perhaps? Even if I am mistaken, my point about Germany stands.

I do not know the ins and outs of French bank regulation. It is fair to say that the French tend to be frugal lot in any case, which explains why the French government had to intervene to get them to buy new cars in the mid-1990s.


Obviously, the size of the proverbial cake matters too. Looking at the rank of countries by per Capita GDP, there is a variety of ways of achieving this. It can be by the Scandinavian means, or the Anglo Saxon means.
EDIT: To Nick, I would hardly say buying a telly is conspicuous consumption given that almost ALL new tellies are flatscreens. Buying a 70 inch screen for a few grand is, buying a 32 inch screen for £500 is not.

I've seen claims that the rate is higher and also lower. Perhaps it depends how it is measured as France seems to have a high level of vacant property.

I still don't see how higher taxes reduce private debt levels.

Sir_Humphrey

Generali wrote: »

I still don't see how higher taxes reduce private debt levels.

I claimed they would reduce public debt levels in the good times. Mending the roof while the sun shines and all that.

nickmason

Sir_Humphrey wrote: »

EDIT: To Nick, I would hardly say buying a telly is conspicuous consumption given that almost ALL new tellies are flatscreens. Buying a 70 inch screen for a few grand is, buying a 32 inch screen for £500 is not.

Fairpoint about flatscreens - I'm just making the point that a lot of this conspicuous consumption argument is a red herring.

Give me a percentage of consumer spending that you reckon is "conspicuous consumption". Unless you argue it's huge - say over 30%, and I would seriously challenge anything over 5% - then the point I make is valid.

Sir_Humphrey wrote: »

I know exaggeration of the other argument is fair game in debating societies, but desist or I will turn this into definition debate!

Red herrings swimming around in false dichotomies are fair game in debating societies too. Here, could you please desist.:D

Generali

Sir_Humphrey wrote: »

I claimed they would reduce public debt levels in the good times. Mending the roof while the sun shines and all that.

Yup. Raising taxes or cutting spending would both achieve the same thing. I misunderstood your point.

The UK Government has too much debt IMO. That other countries have more doesn't mean that the UK is in a good position but that other countries are in worse positions. If people want the Government to tax more rather than cut spending then hey, that's democracy. I don't agree and think spending should fall but what do I know.